FTSE falls in light trading as heavyweights go ex-dividend
BRITAIN’S top share index fell in light, choppy trade yesterday, pressured by heavyweights such as BP trading ex-dividend, and miners and broadcasters after analysts cautioned against further upside to recent sector gains.
London’s blue chip index closed down 7.71 points or 0.1 per cent at 5,892.16. The FTSE 100 has barely moved outside of the range between 5,850 and 5,900 since 3 February.
Ex-dividend factors weighed heavily on the FTSE 100, with drugmakers AstraZeneca and GlaxoSmithKline, oil majors BP and Royal Dutch Shell, and consumer products group Unilever all losing their payout attractions.
Miners fell in tandem with base metal prices, against the backdrop of mixed US economic data, and after Citigroup switched to a bearish stance on the sector, which has rallied 30 per cent since late 2012, on a three-to-six month view.
Anglo American fell three per cent as Citigroup downgraded the miner to “neutral” from “buy”, on valuation grounds.
Anglo American’s share price has rallied 26 per cent since its 12-month low of 2,138p on 4 October, which Citi said is due partly to widespread speculation of corporate action.
European broadcasters were also weak with ITV off 1.5 per cent, as Deutsche Bank turned more negative on the sub-sector in a review, citing a turn in the cycle.
Banks were the standout performers, after forecast-busting results from French peer BNP Paribas and a pledge by China that it will keep investing in euro zone debt boosted sentiment in the sector.
Barclays rose 2.8 per cent as West LB and Citigroup raised their respective target prices on the UK lender following its recent results, with the latter saying “positive near-term earnings momentum in first-quarter 2012 should continue to support the stock”.
A banking analyst at a top investment bank said financials’ outperformance was likely being driven by hopes that China’s support would be enough to prevent a collapse of the financial system as Europe pondered the delay of the second Greek bailout programme, and ahead of the G20 finance ministers summit meeting next week.
“If you play the summit game you go long banks into the summit and then close it out on the day or just before and you can generally make a lot of money doing that,” the analyst said.
Other financials climbed too, with emerging markets focused fund manager Ashmore up 2.8 per cent, taking its 2012 gains to more than 17 per cent, and interdealer broker ICAP three per cent higher.
Volumes remained light — the FTSE 100 traded just 82 per cent of its 90-day average — and the UK’s benchmark remained in a tightly bound range.
MAM fund manager Simon Callow said he was very cautious on the FTSE 100 in the medium term, adding it will struggle to break out of the 6,000 level before July, hampered by concerns about Greek austerity measures.
He has been taking money out of the fund’s equity pot, locking in profits in life insurers and oil services companies after a period of strong performance and betting instead on bonds.